Rise of Power Costs Could Drive Up Rates

The Pacific Northwest has long benefited from the lowest electric rates in the nation due to a large federally owned hydroelectric system, but the cost of maintaining that system is pushing rates up.

Last week, the Bonneville Power Administration proposed an 8.5 percent increase in average wholesale power rates in order to refurbish hydroelectric and nuclear generating facilities, according to Fall River Electric Co-op. Fall River purchases a large portion of the power it sells to members from BPA.

The proposed increase is down from a 12 to 20 percent increase discussed by BPA earlier this year. Fall River, along with other public power entities in the region proposed several areas where BPA could cut costs, restructure debt, and shift some revenue risk. If BPA's proposed rate increase is approved, it would take effect on Oct. 1, 2011.

For Fall River Rural Electric Co-op, the rate increase is not unexpected.

"We anticipate increases in our wholesale power costs and have taken steps for several years to keep our retail rates as low as possible for our members," Bryan Case, the co-op's General Manager said.

The co-op has cut expenses considerably over the last few years and continues investing in infrastructure that will help stabilize electric rates over the long-term, Case added. These investments include the Chester Hydropower Project, which will produce enough power for 1,200 homes, and a new metering system, partially paid for by a Department of Energy grant.

The proposed 8.5 percent increase is considerable in terms of the co-op's overall budget. Wholesale power costs make up roughly 40 percent of the co-op's expenses, and the co-op may have to pass on BPA's rate increase by raising electric rates late next year, according to Fall River.

Fall River has plans to ramp up their conservation programs in 2012 to help members save electricity and manage their energy bills. Fall River is currently reimbursed by BPA for their conservation projects, though BPA's reimbursement comes directly from the co-op's wholesale power purchases- in other words- from the pockets of the co-op's members.